Under the proposed scheme, shareholders of TimesBank will receive one shareof HDFC Bank for every 5.75 shares of TimesBank. "The amalgamation issubject to shareholder and requisite regulatory approval," HDFC chairmanDeepak Parekh said at a press conference in Mumbai. The 1:5.75 swap ratiobetween the shares of the two banks has been endorsed by consulting firmKPMG. The TimesBank scrip, although it touched a high of Rs 22 during theday, closed on the BSE at Rs 17.95, after touching the day's low at Rs15.60. The counter, however, recorded its highest-ever volume of 11.75 lakhshares on the BSE.

The HDFC Bank scrip opened the day's session on the BSE at Rs 92 and closedat the upper circuit level of Rs 99.35. The counters witnessed trading of4.44 lakh shares.

Seeking shareholders' approval, TimesBank has decided to call for anextraordinary general meeting (EGM) on January 7, 2000 after the January 1,2000, EGM of HDFC Bank. "TimesBank will be merged with HDFC Bank undersection 44A of the Banking Regulation Act, which means that a high courtapproval is not required," Parekh said.

The merged entity will be known as HDFC Bank, while the licence issued toTimesBank will be extinguished or surrendered to the Reserve Bank of India.As per the deal, 23.48 million shares of HDFC bank will be given to theshareholders of TimesBank. Of these, the Bennett Coleman group will get17.43 million shares while public shareholders of TimesBank will be given6.09 million shares. HDFC Bank will pay an acquisition premium of about 11per cent to the shareholders of TimesBank, Parekh said.

Timesbank shareholders will hold about 10 per cent stake in the merged bank,in which the Bennett Coleman group will have about 7.7 per cent."There is no lock-in period for the shares issued to the promoters ofTimesBank. However, the promoters have decided not to sell these shares inthe secondary market for at least another six months. In case they decide tosell their shareholding after this period, the TimesBank promoters will giveHDFC Bank a 15-day notice," Parekh said. HDFC Bank has also decided to makea preferential issue to its shareholders so that their stakes remainunchanged after the merger.

Accordingly, 1,33,10,00 equity shares of face value Rs 10 will be issued toHDFC Ltd or a wholly-owned susbisdiary of HDFC Ltd at a price of Rs 94 pershare.